Match the following bond and long-term liability related terms to the appropriate definition.
-An obligation that will not be satisfied within one year.
A)Long-term liability
B)Face value
C)Debenture bonds
D)Serial bonds
E)Callable bonds
F)Face rate of interest
G)Market rate of interest
H)Bond issue price
I)Premium
J)Discount
K)Effective interest method of amortization
L)Carrying value
M)Gain or loss on redemption

Question

Quizplus · Accepted Answer

An obligation that will not be satisfied within one year is considered a long-term liability.

C) Debenture bonds
 Debenture bonds are unsecured bonds that are backed only by the issuer's creditworthiness.

D) Serial bonds
 Serial bonds are a type of bond that mature in installments over a period of time.

E) Callable bonds
 Callable bonds are a type of bond that allows the issuer to redeem the bond before maturity.

F) Face rate of interest
 Face rate of interest refers to the rate of interest that is stated on the face of the bond.

G) Market rate of interest
 Market rate of interest refers to the current interest rate that is being offered on similar bonds in the market.

H) Bond issue price
 Bond issue price refers to the price at which a bond is initially sold to investors.

I) Premium
 A premium occurs when the bond issue price is higher than the face value of the bond.

J) Discount
 A discount occurs when the bond issue price is lower than the face value of the bond.

K) Effective interest method of amortization
 The effective interest method of amortization is a method used to calculate the periodic interest expense on a bond.

L) Carrying value
 Carrying value refers to the value of a bond on the balance sheet, which includes any unamortized premiums or discounts.

M) Gain or loss on redemption
 If a bond is redeemed before maturity, there may be a gain or loss on redemption depending on the carrying value of the bond.

Match the Following Bond and Long-Term Liability Related Terms to the Appropriate